The Australian Prudential Regulation Authority (Apra) has imposed a A$2m ($1.4m) capital add-on to Sovereign Insurance Australia (SIA) citing its “heightened risk profile” from “weaknesses in managing non-financial risk and regulatory reporting”.
SIA has an automotive portfolio, but in recent years it has entered other markets including travel, rental excess and pet insurance.
Apra said it had “identified serious deficiencies” in the insurer’s risk management framework and its management of operational risk, which had been exacerbated by a “failure to comply with requirements of prudential standards, remediate issues in a timely and effective manner and lodge audited financial accounts”.
Apra executive board member Suzanne Smith said the capital add-on “should incentivise” the firm to “quickly and effectively remediate its risk management framework and management of operational risk”.
She vowed to take further action if needed to “ensure policyholder interests are protected”.